Illinois Loves Our Foxconn Deal

“Friends in the Wisconsin Legislature, we beg you: Sign that bad deal with Foxconn,” recently wrote the Chicago Sun Times editorial board. “It’s the neighborly thing to do.”

The Wisconsin Assembly obliged the Chicago newspaper and recently voted 50-39 to approve the Governor’s deal with the Taiwanese company, Foxconn.

But lawmakers were not voting on the deal itself. Contract negotiations are presumably underway. Legislators who voted on the deal did not see the contract, they do not know the details under negotiation, nor will they approve the final negotiated contract.

In essence, they gave the Governor a blank check. For his part, the Governor assigned his troubled economic development agency, the Wisconsin Economic Development Corporation (WEDC), the task of negotiating a good deal for the state.

For the most part, the bill passed by the Assembly reflected the Governor’s original request. Some job training money was added. Language clarified that locals could use a sales tax to pay for needed infrastructure. Furthermore, the state could in essence “co-sign” part of the loan locals took out to pay for infrastructure.

Answering the big question – how do we ensure the state gets promised jobs – was left murky.

In its analysis of the Assembly version of the Foxconn bill, the Legislative Fiscal Bureau noted the bill “would require WEDC, to the extent possible, attempt to include terms in any agreement negotiated between it and [Foxconn to] encourage the business’s hiring of Wisconsin residents.”

As the Chicago Sun Times editorial writers gleefully reviewed the benefits to Illinois, they also summarized the risk taken by Wisconsin Assembly members who voted in favor of the bill.

“Best we can tell, it’s a crap shoot as to whether luring the giant electronics company to Wisconsin would work out well for you, given the billions of dollars in tax breaks your governor has promised, but it would be terrific for Illinois. It would cost our state nothing, yet up to half of the new jobs could go to our residents, while O’Hare Airport would get the new international travel business.

“The best thing that ever happened to Illinois might be losing Foxconn to you, Wisconsin. Much appreciated.”

“…Walker downplayed the $3 billion worth of tax incentives that the Wisconsin Legislature still must approve, and an independent analysis says it would take at least 25 years for Wisconsin taxpayers to break even on the deal. The break-even point would come even later, according to the analysis by the Legislative Fiscal Bureau, if Foxconn employed closer to only 3,000 — which could happen — and 40 percent or more of those jobs went to people who live out of state. In Illinois, that is.”

“Under that scenario, an analyst for the Bureau told Reuters, the break-even point would be so far in the future that it’s “silly to talk about.”

I heard much discussion among local residents about the “break-even point” of the plan – the point at which the state would recoup its “return on investment.” These numbers are fuzzy at best.

A break-even number makes many assumptions, including the number of jobs created. The administration claims 13,000 jobs although Foxconn publicly said 3,000 jobs. The administration uses average wages of $53,874 but the bill voted out of the Assembly cites $30,000. Most investment analyses discount future dollars while the administration’s analysis, reviewed by the LFB, uses all amounts in current dollars.

The Bureau reminds lawmakers “any cash-flow analysis that covers a period of nearly 30 years” is “highly speculative.” The Bureau also mentions other provisions hidden in the Governor’s bill. A Brookfield financial services company is given an award, and other enterprise zones are created. These new commitments, passed by the Assembly, would cost the state another estimated $100 million.

Sun Times editorial writers summarized the deal, “Wisconsin would be taking all the risks, even as Illinois enjoyed a nice share of the benefits. The Foxconn plant likely would be located right across the border in Kenosha County or Racine County. The commute from Waukegan to Kenosha is just 16.5 miles. The commute from Zion is ten.”

I could not agree more with the conclusion of the editorial, “Border wars are stupid. Interstate job-poaching is nothing but a race to the bottom. And the best way to tap global markets would be to create a regional economic development strategy.”

10 thoughts on “Op Ed: Illinois Loves Our Foxconn Deal”

Maybe I missed something, but were there any public meetings about the Foxconn deal? After all, $3 billion is a lot of taxpayer money. Shouldn’t the public have a say on where our money goes?
Oh wait, I forget that we’re now being governed by Walker and his cronies. Never mind.

Vinehouse stated nothing about tax reciprocity ? Thousands of people work in Illinois and have residents here. What is Vinehouse saying Wisconsinites shouldn’t work in Illinois seems a bit harsh. If they want to live in Illinois so be it. Their state taxes belong to us and they use up Illinois services sounds like a win-win to me.

Peoelare leaving Illinois in droves. they will move here asap when they get the jobs. SE Wiscosnin cause of Amazon and now Fox conn. businesses that service Fox Conn also will mov her in droves. We can see that now.
We will see return on the tax money 10-1 over the next 50 years.
Wisconsin is growing, Illinois under the thumb of the Left , will never recover from here idiotic leaders.
But even better the Sour Grapes lefties are making complete asses of them elves. They re taking the positions of their far left who hates businesses.

Jason, I think the issue is less about income taxes collected but the fact that the Illinois residents will be spending their earnings in their state. (property taxes, sales tax, discretionary spending etc…)

WCD, that is wonderful thinking. I’d take 10:1. I think you can appreciate that $3B is a huge investment and that it is important to put it under the microscope. It is, after-all, a gamble that we still don’t know the odds on. I don’t know how many people have moved here because of Amazon, most of those jobs are low pay which provides little incentive for someone to relocate.

Nice write up in the paper Bob. I wonder if all those people at the event know how you behave here? Or is that how all of you talk at your little party? You call everyone who isn’t hard right a racist ass? Also, where’s the diversity? That party was nothing but white people, average age about 70.

You forget that Illinois has a Walker style Republican Governor at this time. His inability to work with the Illinois legislature (both Democrats and Republicans) is what is causing the biggest problems there.

Those in favor of the Foxconn deal only see what they want to see. Situating a plant in Kenosha County is going to help Illinois and the Chicago area more than Wisconsin. Saying that people are fleeing Illinois to Wisconsin runs counter to the evidence. Wisconsin is the state that is experiencing the most profound net brain drain, though there is less of a net loss to Illinois. Wisconsin has been experiencing a brain drain for more than 20 years. Graduates from major universities such as UW Madison and Marquette don’t stay in Wisconsin because the opportunities and amenities (such as good public transit, good schools, public investment in the arts and lots of other leftist style programs) are not here to entice them to stay. Low taxes is so last century when it comes to attracting the industries and knowledge works of the 21st century. Unless of course, you are trying to lure the likes of Foxconn who has already conned 4 other communities out of billions of dollars without creating a single job.

People are fleeing Illinois but it’s not to Wisconsin. It’s almost entirely to Sun Belt states. People aren’t going to flock to Wisconsin from other states for $40,000 or $50,000 a year jobs at Foxconn, 30-35 miles from Milwaukee. That is a pipe dream.

“Language clarified that locals could use a sales tax to pay for needed infrastructure. Furthermore, the state could in essence ‘co-sign’ part of the loan locals took out to pay for infrastructure.”

Interesting that suddenly Walker may “allow” cities to have more local control about their sales-tax options–as long as it helps his re-election prospects. If that comes to pass, maybe Greater Milwaukee will finally be able to enact a sales tax to support parks, transit, culture and other QOL assets.

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